Japan’s CBD market stands at $154 million and should continue to grow, the report suggests

Japan’s CBD market reached $154 million (24 billion) last year, and further growth is expected following the enactment of changes to the nations main cannabis law, according to a new report.

Market researcher Euromonitor International said the expansion of Japan’s CBD market, which has soared 600% since 2019, can be expected to continue after the Japanese Parliament amends the Cannabis Control Act at the end of last year.

Under the changes, medical products derived from hemp are being decriminalized, although the amendment also closes a loophole in current regulations to explicitly ban recreational marijuana. Medical marijuana also remains illegal.

Medical degree only

The centerpiece of the law update is a provision that will technically allow domestic production of medical-grade hemp-derived cannabinoids, primarily prescription CBD, but the specific rules for such production are still not entirely clear.

It is also unclear whether the updated Cannabis Control Law will legitimize the import and sale of over-the-counter CBD extracts that make up the bulk of legal cannabis sales in Japan, as those regulations are also being developing

Under current Japanese regulations, only products made from hemp seeds or stems for non-pharmaceutical products can be legally imported. But that didn’t stop importers and sellers from simply labeling their CBD products as coming from hemp stems, when in fact they were made from flowers, as law enforcement agencies often turned a blind eye.

Fast business

Japanese consumers buying CBD before 2021 were those who wanted to get high but had no choice. Thus, CBD sales flourished until the introduction of hemp-derived psychoactive substances such as delta-8 THC and HHC hit the market.

Eventually, the government began cracking down on intoxicating hemp compounds, but law enforcement agencies have said that controlling products containing these unregulated substances is like playing a mole.

About 150 companies are believed to be involved in the CBD trade in Japan as importers or distributors of products sold online and in brick-and-mortar outlets, and Euromonitor estimates there are 588,000 regular CBD users.

Will big players come?

The overhaul of the Cannabis Control Act could attract big companies to enter the market in 2024, according to Euromonitor senior analyst Aya Suzuki.

Suzuki told the Japan Times that major companies, such as UHA Mikakuto and Cheerio, have already launched CBD-infused gummies and drinks in certain regions and sales channels.

Despite challenges in ensuring quality, regulatory compliance and consumer education, CBD sales are expected to surpass the illicit cannabis market by 2026, driven by increased health awareness and well-being among consumers seeking alternatives to traditional products such as cigarettes and alcohol, Suzuki wrote in a summary of the Euromonitor report.

He said the growing presence of CBD in various sectors, including health and beauty and food and beverage, should reshape social perceptions of CBD and cannabis.

Security concerns

Still, concerns about product safety and regulatory compliance remain, highlighted by incidents such as illnesses linked to CBD-infused gummies containing the psychoactive compound HHC that were widely reported last year.

Suzuki said Japanese companies that source CBD product ingredients from overseas have increasingly seen their products removed by customs officials because they believe the products contain or the products have been found to contain THC.

The year 2023 marked a pivotal moment for cannabis in Japan, signaling a potential turning point for the country’s CBD market, Suzuki wrote. Key to market success will be companies’ ability to educate consumers about the benefits of CBD products, emphasizing compliance, quality control and scientific evidence.

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